There is no respite for South African consumers facing high food prices for now, say industry experts in light of the latest consumer data by Statistics South Africa.
The data released by Stats SA yesterday showed that consumer food price increases accelerated by 14.4% in March from 14.0% in the previous month. The food product prices that increased notably were milk, eggs and cheese, fruit, vegetables, and sugar, sweets and desserts.
Consumer food price increases were likely to remain sticky at relatively higher levels for the coming month, which would likely be a peak, the Agricultural Business Chamber (Agbiz) said yesterday.
The agricultural organisation’s chief economist, Wandile Sihlobo, said yesterday that there could be some moderation from around May and into the year's second-half.
“For April, we will likely see the continuation of the tail-end effects of the high grain prices of last year. If sustained, the current relatively cheaper grain prices will filter mainly in the year's second half. There is a lag between three and five months between farm and retail prices of some products.
“Other product prices that could remain elevated in the near term are fruit and vegetables. The unfavourable weather conditions over the past few months disrupted production; hence there was a pick-up in some vegetable product prices in recent months. But this will be a temporary blip and should also soften in the year's second half,” Sihlobo said.
Agbiz said the impact of load shedding might also influence prices for the next few months. The mitigating measures that businesses were currently making to improve power supplies, along with the diesel rebate announced by the finance minister, should bear fruit later in the year.
Positively, global agricultural commodity prices were softening.
“If the rand/dollar exchange rate remains relatively strong, this will soon be a reality in South Africa, with a lag at the retail level. Notably, South Africa had a favourable agricultural season following adequate rainfall.”
South Africa's consumer inflation food price outlook for the second half of the year was reasonably better.
The key drivers of the expected moderation would be meat, grain-related products, vegetable oils and fruit, which comprised roughly two-thirds of the consumer inflation food price basket.
Paul Makube, a senior agricultural economist at FNB Commercial, said the latest inflation data showed no respite for consumers as headline consumer price inflation inched 0.1 percentage point higher to 7.1% y/y in March 2023 from 7.0% y/y in February, according to the update from Stats SA.
In the food basket, the bread and cereals category still posted the highest increase of 20.3% y/y, although below the 20.5% y/y pace recorded in February this year.
The agricultural economist said unrelenting cost pressures emanating from load shedding would continue maintaining the stickiness in food prices in the short term.
“However, monthly prices on both the domestic and international markets continue to trend on the downside, which has the potential to limit further upside in consumer prices in the second half of 2023,” he said.
Benay Sager, the head of debt solutions provider DebtBusters, said the impact of food inflation on the consumer’s budget had been evident to them for quite some time, as was indicated in their quarter four 2022 Debt Index.
“We continue to see the same trend, meaning that consumers are spending a higher portion of their incomes to provide for basic foodstuffs. Generally, this will take precedence over debt repayments, as we also see more and more debts being strained in terms of being in arrears and so on.”
DebtBusters said it expected the situation to continue for the rest of the year for South African consumers, with more money being spent on basic food items since these were necessities.
BUSINESS REPORT